Xi openly said and made no secret that China was investing in RESEACH and DEVELOPMENT in 2014. There was no surprise. It isn't due to Chinese subsidies either. It is simply R&D instead of corporate criminals fluffing quarterly earnings with absolutely no commitment to even the company itself, and certainly not customers, neighbors, country, the world ecosystem, or humanity as a species. The USA gave GM 6 billion dollars for EV R&D in 2017. The corporate criminals used it to do a stock buy back to fluff their short term earnings. We should not be getting punished with tariffs to subsidize criminals. Let these shits fail and fall apart first. Then build something new from the ashes. Their inability to fail is the primary reason that they are failing. We really do need a league of c-sweet assassin heroes, or a dark knight of the real Gotham.
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Chinese constructors indeed told this plan, I've seen the interviews, they've been following it exactly and got the results they were after. We knew this 10 years ago. There should not be any surprise.
We knew the Western manufacturers would deny, delay and lobby against this to keep shareholder value up, to cry foul when sales take a hit and they did not disappoint. It's the classic market disruption, something we've seen many times in history, but now on the losing side. Again, no surprise.
Capitalism has a fatal flaw with long term planning and it's been exploited masterfully by China. Actually China had plans to uproot the entire fossil fuel sector and replace it with their renewables, so hold on for a lot more drama.
The USA gave GM 6 billion dollars for EV R&D in 2017.
The USA forgot to nationalize again.
Across Europe, car companies are cutting jobs and shutting factories - to the extent that some question their very existence. So it's worth asking the question: what's gone wrong with Europe (and for that matter America's) car industry?
Maximizing share value at the expense of quality, productivity, and affordability for consumers. Like transnational corporations ALWAYS do when they're allowed to by negligent and often complicit governments.
TL;DR: Under-regulated capitalism is what's wrong.
Competition of Chinese vs. European industries is not faire, because there are worker rights in Europe. Chinese companies are allowed to underpay and therefore produce much cheaper products. If Europeans want to buy products made by fairly payed workers and support their own companies, they need to disallow unfair competition to enter their market. So yeah, under-regulated capitalism, I agree.
Nah CEO profits are through the roof and salaries are barely living wage everywhere.
I don't think wages in China and Germany are really comparable. China and the US, could be. But we were talking about Europe.
Meanwhile, North America is applying tariffs to Chinese Electric Vehicles, rather than subsidizing North American EVs, allowing North American car manufacturers to continue to invest in and sell Gas Vehicles.
If we actually cared about competitiveness we would be subsidizing EVs to match China (if not exceed) so that NA companies could invest in new technology and supply chains. Instead by discouraging foreign competition, we're just defending our auto industry's right to not innovate and to keep burning fuel.
The problem is that the main American(*) EV maker, Tesla, is politically toxic to the save-the-planet camp. Whereas the favored US carmakers are incompetent.
(*) Looked at another way, Tesla is part of the Chinese EV wave, not in opposition to it. More than 50 percent of its manufacturing capacity and profits are from its Shanghai plant.
Another problem is that American car makers are not interested in making affordable small vehicles, they're interested in maximizing their per vehicle profit margins which means SUVs and trucks. Very few options for compacts globally, let alone in north America.
No, Tesla is not. Ford would not be part of the Chinese EV wave just because it was able to sell cars in China (if it could).
They should be doing both.
30% Tariff on PRC cars (note: not just EVs) which directly funds a 30% subsidy on US made EVs. (just EVs)
I'm so done with American automakers. Politicians want a free and open market but pass protectionism and subsidies for their corrupt buddies in the industry. Chinese companies simply leveraged their assets and knowledge to make good EVs while their American counterparts only cared about using whatever cash infusions they received from the government for their own personal gain. If you disagree, just know that the upcoming administration is full of oligarchs who will try to regulate their way into monopolies through tariffs, legislation, judicial review, and the dismantling of important governmental agencies.
It's not (or at least not just) about subsidies, cheap Chinese labor, etc. It's a fairly classic tech disruption story. Globally, the established carmakers know the future is electric, but they've got existing plants, workers who are trained to build ICEs, long established suppliers who make ICE parts, and so forth. You can argue that executives are being paid big bucks to solve such issues, which is true, but it's truly a hard problem. Especially when these are real factories and workers and industrial equipment you're dealing with.
But why did the disrupters come from China? Everyone is pointing to state support and existing strengths in battery tech, which are supply side factors, but there are also reasons on the demand side. Chinese people have relatively few cars (300 cars per capita, versus 850 per Capita in the US or 603 in the UK). As people get richer and start buying cars, there's a chance for EV makers to get in the door. This, by the way, is why it makes sense that the Chinese EVs are entering on the cheap end of the market, whereas Tesla, which started out selling to western consumers, entered on the premium end.
China has its own ICE carmakers, but they aren't established enough (and politically connected enough) to really push back against the onslaught of EV firms. (China can hardly impose tariffs on itself...) And at this point, the smarter ones like Geely have decided to go with the flow.
China is also following the well-tread path of Japan and then Korea. Build up a cheap manufacturing base, move into more complex products, then eventually stand up heavy industry in automotive. But China's experience with batteries through consumer electronics along with its natural abundance of rare earth minerals, alongside the general maturity of EV technology, positioned it well to take an electric automotive route where Japan and Korea previously went ICE.
One other factor is that ICE engines are extremely complicated engines with many unique parts and established car manufacturers have perfected the technology over many generations. For comparison, electrical motors are a lot simpler engines, that are easier to manufacture and maintain. I read an article if VW switches entirely to EVs they still need to fire tens of thousands of employees as they won't be needed to produce the same amount of cars.
This and the fact that a lot of the focus on the EVs is on the software and European car manufacturers are struggling immensely of building modern software to run their cars. This gives Tesla and Chinese EV manufacturers a big advantage.
Agreed, though the software part is a bit mystifying to me. It's not like Europe doesn't have good software engineers, so the fact that so many of Europe's carmakers are having so many problems competing on software is jarring. It has to be some kind of institutional/cultural clash within these organizations.
It’s not like Europe doesn’t have good software engineers, so the fact that so many of Europe’s carmakers are having so many problems competing on software is jarring. It has to be some kind of institutional/cultural clash within these organizations.
I think the problem with software for European cars comes from the fact that so much of it is outsourced to so many suppliers (Bosch is one example). One supplier makes an HVAC module and the software for it. Another makes a braking system module, and the software for it. Another makes the drive train control modules, and the software for it. Then the car maker is required to build a car with all these disparate pieces and approaches with yet another outsourced company that makes the over all UX and UI software. Each company's design philosophies, update mechanisms, and testing vary leading to a patchwork quilt of a final product. Yes a patchwork quilt will cover you, but upon usage and washing it will wear differently or fade.
VW specifically ran into just this problem. source
"To do that, the VW Group needed, for lack of a better term, a Tesla-like approach to software and digital technology. Historically for the entire auto industry, "software" means things like engine management, or driver-facing bits like infotainment and navigation, or numerous components made by different suppliers with different software standards who often didn't talk to one another. It was piecemeal and old-school, compared to the smartphones and tablets that have become an integral part of our lives over the past two decades."
Contrast this to the highly vertical approaches of many of the Chinese EV companies or Tesla. These companies build nearly all of their own modules (or at least contract manufacture them) then wrote all their own software for stitching the car together into one experience. There is one software update team. There is one team responsible for the bus and communications standards and protocols. If a team handling the HVAC needs to capture heat from the electric motor team (for energy efficiency and motor performance), these teams are in the same building or at least in the same company.
For better or worse, its cars built like software instead of parts from various disparate manufacturers like one would building a PC.
In both the US and China software developers get paid a lot more than an average job. Not so in Europe.
300 cars per person?
The battery tech was out there. It was just an engineering problem and the legacy western companies refused to do it. China put the work in years before companies like Renault or Ford were serious about it. So there was no "leapfrog". Our car companies just assumed China and India couldn't do it. And they were wrong.
Have their tried subsiding fossil fuels even more?
China has very few petroleum and methane reserves so there's no real industry in China to subsidize for those. China does have lots of coal reserves though. They have the 4th largest in the world right after the USA. Yes, China heavily subsidizes their available fossil fuel.
"The GSI identified around USD 18 billion (CNY 121 billion) of subsidies given to the generation of coal-based electricity in 2015." source
Factor that a lot of people miss is that Chinese companies have been building cheap EVs at scale before Tesla was even an idea.
Sure, they were two-wheeled, not climate controlled, lacked creature comforts, and whatever… but those are simple problems when you have a big battery to run things off of.
Electric bikes and mopeds built up expertise in China that carried over naturally to electric cars.
One thing about the Chinese push: The quality is not there. A friend has a BYD. I had a chance to take a really good look at it. Things like primer showing in certain areas. The manufacture appears rushed. She also had the infotainment controls fail, and the dealer is dragging their feet to repair under warranty.
China can make quality stuff, but it appears that in this case they are pushing price at all costs. Maybe they will improve quality as time goes on, but right now I wouldn’t buy. There are some decent options in Europe. Renault is doing a decent job. The R5 electric range is not great, but Ibelieve they start at under 25000 Euro.
Maybe western and Japanese finally will get their act together, out of sheer terror, and pose a real challenge to the Chinese.
A major problem is that Western and Japanese makers are decades or even over a century old, and work in an incremental, not disruptive fashion. Changing that mentality is hard.
Saw a BYD advertisement here in Copenhagen the other day. Made all these claims of Chinese EVs in Europe a lot more real.
Copenhagen is gonna be a difficult market, though. There are a lot of Teslas driving about.
I would rather be spotted in a BYD than a Tesla nowadays.
who wouldn't?
They guess they are doing EVs now.